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  • USD/JPY remained depressed on Tuesday and dropped to near two-week lows.
  • The technical set-up supports prospects for an extension of the bearish trend.

The USD/JPY pair continued losing ground through the early North-American session and weakened further below mid-107.00s, hitting near two-week lows in the last hour.

The overnight sustained break below the very important 200-day SMA was seen as a key trigger for bearish traders amid the prevailing bearish sentiment surrounding the USD.

A subsequent slide below the 38.2% Fibonacci level of the 101.18-111.72 recent positive move now supports prospects for an extension of the near-term depreciating move.

Meanwhile, RSI and MACD indicators on the daily chart have just started drifting into the negative territory, which further adds credence to the near-term bearish outlook.

Hence, some follow-through weakness towards testing sub-107.00 levels, en-route 50% Fibo. level around the 106.55-50 region, now looks a distinct possibility.

However, oscillators on hourly charts have already moved on the verge of breaking into the oversold territory and warrant some caution amid improving global risk sentiment.

That said, any attempted recovery move is likely to confront some fresh supply near the 107.75-80 region (38.2% Fibo.) and should remain capped near the 108.00 mark.

USD/JPY daily chart

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Technical levels to watch